RENEWABLE ENERGY:

Massive wind turbines with a diameter as big as two football fields will cut the cost of offshore wind energy by at least 38 percent in seven years, according to a Danish company.

Dong Energy, the world's largest developer and operator of offshore wind farms, aims to cut the cost of wind energy in the North Sea to less than €100 ($130) per megawatt-hour by 2020 compared with €160 ($209) last year.

The company, which is owned by the Danish state, drills for and produces oil and natural gas, and operates conventional power plants in Europe, says it can achieve this cost reduction for offshore wind in the U.K. sector of the North Sea.

"It's very challenging, but we think it's very much a realistic and achievable target," said Benj Sykes, wind power director for the United Kingdom at Dong. "The cost-of-energy target requires governments to ensure transparent planning, consenting and support regimes up to 2020 and beyond. This will ensure investment certainty, continuous build-out rates and project flow, which will in turn secure maturation of supply chain and technical innovation and investments."

Dong's target is actually more ambitious than that of the U.K. government, which wants developers to cut the cost of offshore wind to £100 ($152) per MWh by 2020. It still wouldn't be as cheap as onshore wind, which currently costs about $85 per MWh, while coal costs $82 and natural gas costs $71.

The company aims to achieve its target in the United Kingdom, where it is involved in every aspect of offshore wind, from turbines, array cables, offshore substations and export cables to onshore substations before the power goes to the national transmission grid. At its offshore wind farms in Germany and Denmark, the company is in charge only of the turbines, cables and offshore substations, so it has less scope to control the total cost of energy.

To get to €100 per MWh, Dong plans to radically increase the size of the offshore turbines it will install, from 3 to 4 megawatts currently to 8 to 10 MW in 2016 through 2020. Such turbines don't even exist yet.

8 MW turbine in the works

Vestas, the world's second-largest wind turbine maker, is working on an 8 MW offshore turbine, but it won't have a prototype ready for offshore testing until next year. Dong announced in December that it entered into a cooperation agreement with Vestas to test the machine and get involved in its design earlier than previously anticipated so it would gain a detailed understanding of the new turbine at an early stage.

In the meantime, Dong, which last month asked the Danish government for an equity injection of $1.4 billion after losing money on natural gas storage investments in Germany, is planning to test two new Siemens 6 MW turbines at an offshore wind farm in southeast England starting in the second quarter of this year.

There are no known serious attempts to develop a 10 MW offshore turbine currently, although Siemens has said that eventually it sees itself moving to producing bigger machines. General Electric announced in 2011 it was getting help from the U.S. Department of Energy to work on a new superconducting generator using cryogenic cooling technology that could eventually be used in wind turbines of 10 MW or higher capacity.

The European Wind Energy Association projects that offshore wind capacity will grow to 40 gigawatts by 2020 from 4.9 GW now. Germany, which has pledged to shut down all its nuclear reactors by 2022, wants 25 GW of offshore wind installed by 2030, up from only about 280 MW now.

Denmark, which had 923 MW installed as of last year and 400 MW under construction, invited bids in November for an additional 500 MW of offshore wind. The share of wind power in Danish electricity supply is set to almost double from last year's 26 percent to 50 percent by 2020, according to the government, which plans to replace 50 percent of coal use with renewable energy sources over the next eight years.

France plans to install 6 GW of offshore wind, tidal and wave power by 2020 as part of a plan to get 23 percent of its power from renewable sources. And the United Kingdom, which currently has 3 GW of offshore wind capacity, plans to increase that sixfold to 18 GW by 2020.

But the Boston Consulting Group says the industry will fall short of 40 GW by 2020 because of lack of funding. The consultancy says a capacity of 25 GW is more realistic by the end of the decade.

Expanding Europe's grid

Another issue is the intermittence of wind and its effects on the power grid, which is still fragmented in Europe.

Grid companies in Great Britain and Denmark are completing studies for the first subsea cable linking the two countries in a bid to boost electricity trading and help integrate a growing share of wind power output.

The United Kingdom has three operational power links with Ireland, France and the Netherlands, and has projects for connections with Norway and Belgium, as well as boosting capacity with France and Ireland. Denmark has cables that connect to Norway, Sweden and Germany, and is increasing capacity toward Norway while considering a link to the Netherlands. Denmark's connection with Germany has suffered from bottlenecks from time to time. In Germany, several offshore wind farms have been delayed because connections to the grid weren't made on time.

While taking advantage of better grid connections and boosting the size of turbines, Dong will take other steps to reduce offshore wind costs. The company wants to switch from monopile foundations to jacket foundations and eventually to next-generation foundations for deepwater sites and large turbines. The manufacturing of such foundations will need to be industrialized and standardized in serial production to bring down costs.

The industry will go from using installation vessels borrowed from other industries, such as oil and gas exploration, to multipurpose vessels that can carry several turbine components out to sea at the same time and complete more than one task per outing.

Right now operations and maintenance are mostly done by crew vessels, which are at the whim of the ocean weather. Dong says the industry is moving to using a combination of vessels and helicopters, depending on the situation. Eventually, with the next generation of mammoth turbines, service requirements are expected to diminish because of high reliability of the turbines and because developers will use more remote monitoring and diagnostics of maintenance problems.

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